At least once a month a reader asks what he or she should do. Take it now or wait? Is the smaller bird in the hand now, worth more than the bigger one five years away? Readers also wonder if there is some calculation that shows the point at which choosing one over the other is better.

There isn’t a simple, one-size fits all answer, since each person has different financial needs. Some are more or less healthy than others and the biggy is knowing the unknowable — when you’re going to die

But there are some rules of thumb that can help. I asked two former chief actuaries at large pension consultants and the head of the Bank of Montreal’s wealth management team to weigh in. By the way, all three are waiting as long as possible before starting their CPP.

Here’s what they say:

If you need the money to live on, take it as soon as possible. If you have health problems or have a family history of short life spans in retirement take it as soon as possible. If you think you can invest the money and come out ahead, take it early, but be warned that you’ll need a pretty hefty rate of return. You will pay tax on the pension and pay more tax on any profit unless you can put it into an RRSP or a Tax free Savings Account (TFSA).

If you don’t need the money, wait as long as you can. You get a lot more and it is indexed and we’re living longer. A woman who is 60 this year can expect to live on average to 89.3 according to the Canadian Institute of Actuaries, whose mortality tables set the bar for large pension funds. A man who is 60 can expect to live to 87.3.

Malcolm Hamilton, 63, Senior Fellow at the C. D. Howe Institute and former head actuary and partner at human resource consultant Mercer.

“This is a decision that many Canadians will have to make based on intuition, not analysis. It depends on so many assumptions, including your life expectancy (who knows what that is), whether or not you have stopped working and if you aren’t working, your CPP earnings history (can you drop out future years of low earnings or not.)”

Hamilton says other considerations include your assumptions about interest rates and your rate of return and your future tax rate.

“As someone who retired 15 months ago, I have so far chosen not to apply for the CPP,” he says.

"[Starting early] is the bird in the hand argument. The funny thing is that members of defined benefit plans do just the opposite. Few of them take their early retirement before the age when it is reduced.

“Is [starting later] always better? It depends on one’s life expectancy. If an individual has health problems and is unlikely to live as long as the average person, then early commencement (at 62) starts to make more sense.

“I don’t buy the argument that one should take the bird in the hand because we don’t know how long we’ll live. The notion behind this is that if we die young then we’ll regret not having started CPP earlier.

“Of course, being dead, we are beyond any regrets. The greater regret is taking CPP early and then living a long life. One will end up having much less guaranteed income in advanced old age than if they started their CPP late.”

Chris Buttigieg, 40, is a Certified Financial Planner and Senior Manager of Wealth Planning Strategy at the Bank of Montreal.

Buttigieg has developed a tool that calculates the breakeven points of taking CPP at various ages. It is used by the bank’s financial professionals in discussions with clients. It assumes the changes are fully phased-in, you get the maximum pension and if you invest the money it earns 5 per cent return before tax.

Buttigieg says the cornerstone of the decision is to have a financial plan that sets out what you want to do with your retirement.

“That’s the important thing,” he says. “What are your goals? See what you need and then work back to whether you should take it early or late. Everybody’s retirement is different.”

Here are his CPP pension breakeven points:

* If you live beyond 72, then you would be better off waiting until age 65 to begin receiving the pension rather than at 60;

* If you live beyond 77, then you would be better off waiting until 65 to start the pension rather then 60, that is if your plan is to invest it, assuming a 5 per cent pre-tax rate of return;

* If you live to 80, then you’re better off starting CPP at 65 rather than waiting until 70;

* If you live beyond 90 (and plan to invest it) then you would have been better to wait until age 70.

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